02133cam a22002657 4500001000600000003000500006005001700011008004100028100002100069245011300090260006600203490004100269500001900310520098600329530006101315538007201376538003601448690007001484690010501554700001701659710004201676830007601718856003701794856003601831w6424NBER20180319225404.0180319s1998 mau||||fs|||| 000 0 eng d1 aPortes, Richard.14aThe Emergence of the Euro as an International Currencyh[electronic resource] /cRichard Portes, Helene Rey. aCambridge, Mass.bNational Bureau of Economic Researchc1998.1 aNBER working paper seriesvno. w6424 aFebruary 1998.3 aThe European Union will enter Stage Three of Economic and Monetary Union (EMU) in 1999. The development of euro financial markets and thickness externalities in the use of the euro as a means of payment will be the major factors determining the importance of the euro as an international currency. As euro securities markets become deeper and more liquid and transactions costs fall, euro assets will become more attractive, and the use of the euro as a vehicle currency will expand; the two effects interact, as we demonstrate. We use a three-region world model as a framework for alternative steady-state scenarios. With forex and securities market data, we assess the plausibility of those scenarios and the implications for economic efficiency (welfare). We find that the euro may take on some of the current roles of the dollar. The welfare analysis reveals potential quantitatively significant benefits for the euro area, at the cost of the US and (to a lesser degree) Japan. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web. 7aF3 - International Finance2Journal of Economic Literature class. 7aF4 - Macroeconomic Aspects of International Trade and Finance2Journal of Economic Literature class.1 aRey, Helene.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w6424.4 uhttp://www.nber.org/papers/w642441uhttp://dx.doi.org/10.3386/w6424